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July 23, 2020
Developing A Monetary Interest In A Separate Property Parcel?

The easy answer to whether the community can develop a monetary interest in a separate property parcel is yes. When a married couple gets divorced, determining what that financial interest is generally quite difficult.

California is a community property state. This means that all property acquired by you and your spouse during your marriage belongs to you both. In the divorce process, marital property is divided equally between you and your spouse.

Separate property is property either of you owned before your marriage. If you own rental property, the rent you receive from that individual property belongs to you separately. If you sell your separate property and replace it with the proceeds, the new property is still your personal property. This property remains your separate property and is not divided with your spouse during the divorce.

Also, anything you purchased with your inheritance is your separate property. Anything you bought with your earnings after the separation date is also your individual property.

A problem arises when separate property has been commingled with marital property. Determining how much of the asset remains the individual property and how much it has become community property can get very complicated.

How the Community Develops a Monetary Interest in a Separate Property Parcel

The community develops a monetary interest in the separate property by commingling, which means the individual and community property have become mixed. One typical example involves real estate. Another is the division of a retirement plan. 

Real Estate

The problem occurs when one party owns a house before the marriage. The couple moves into the home, and mortgage payments are made from the community property earnings of the couple. 

The separate property owner may sell it and use the proceeds for a down payment on a new home for the family. Again, mortgage payments are made from the earnings of the couple, which are community property.

During the divorce process, the equity in the family home is commingled. Part of it is separate property, and part of it is community property. 

Retirement Plan

One party may have a retirement plan through their employer where contributions were made from a salary earned before the marriage with contributions made from earnings after the marriage, which were community property. The equity in the asset has been commingled and is both separate and community property. 

Professional help is required to determine the value of the community property

Generally, a lawyer’s help is required in determining how to trace the assets and determine how much of the investment is separate property and how much of it is community property. Established formulas are used to calculate the value of the community property, which is then divided equally between you and your spouse.

To learn more about determining whether an asset is a separate property and part community property, you need the assistance of a seasoned family law professional. Contact us at Hartley Lamas Et Al. today. We will help you determine your community or separate property interest in an asset. We will fight for your best interests using all of our available resources.

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